The number of planned hotel developments in the Middle East declined in the first quarter because of the global financial crisis, according to a report by Lodging Econometrics. Thirty-four per cent of all hotel development in the region was in Dubai. There were 124 projects being developed in the emirate, with a total of 48,558 rooms.
"Dubai's average project size is 392 rooms, one of the highest for any country or market worldwide, second only to Las Vegas," said analysts at Lodging Econometrics, a hotel property research company based in the US. The report said 32 hotel projects in the region, representing 8,178 rooms, were cancelled or postponed in the first quarter. Nine projects were cancelled in Dubai, six of which were already under construction.
The number of hotel projects in the Middle East fell 14 per cent to 477 from a peak in the second quarter of last year. The number of rooms fell 13 per cent to 142,702 rooms. "The global economic crisis, which has affected credit availability and caused decreases in consumer and business travel resulting in occupancy and room rate declines throughout EMEA [Europe, the Middle East and Africa], is also having a serious impact on lodging development," the report said.
"The availability of financing is so restrictive and lodging operation declines are impacting so significantly that, of the 116 cancellations and postponements reported in EMEA, 51 or 44 per cent were already under construction and abruptly halted." But as more than 53 per cent of the planned projects in the Middle East are under construction, new hotel openings are expected to accelerate this year, next year and in 2011, as these projects come on line, according to the report. The region is expected to see 99 new hotels or 25,829 rooms this year and 110 or 31,725 rooms next year, with the majority in Dubai and Abu Dhabi.
Lodging Econometrics also said that "construction starts" across the EMEA region continued a downward trend that began a year ago, "as the lack of available capital keeps a brake on project migration up the pipeline towards 'under construction', causing a backlog of stalled projects". In the Middle East, 22 new projects or 6,801 rooms were announced in the first quarter, with five each in Egypt, Saudi Arabia and Abu Dhabi, the report said.
"In quarter one, all three regions reached trend line lows for new project announcements into the pipeline, as the lending and operating environment continued to impact developer sentiment." The Rezidor Group, a hotel management company that operates the Radisson brand, said it planned to develop 5,000 rooms in the next five years in the Middle East. "I'm sure that there will be delays with some of these projects and there might be some projects that will not materialise," said Marko Hytonen, the Middle East vice president for Rezidor.
But Mr Hytonen said that as well as new hotels, the company was also looking at conversion opportunities in the Middle East that would not appear in the development pipeline. "When we look at total numbers, I believe conversions will come at very short notice", and should balance out delays and cancellations, he added. Rezidor, which is based in Brussels, has under development in Dubai the Radisson Blu Hotel Jumeirah and Radisson Blu Hotel Trade Centre District, due to open by 2012 and 2013 respectively. Later this year, the group is scheduled to open a Park Inn and a Radisson Blu hotel on Yas Island in Abu Dhabi.
Mr Hytonen said the thousands of rooms forecast to come on line in Dubai this year and next year should not be taken for granted. "The operators have kept these hotels in the books and they will keep those there until the moment that they basically say that, 'yes, we know these will not materialise'." rbundhun@thenational.ae